Financial Technology and AI
Module 0
Financial Technology
What is FinTech?
- The verbatim definition:
FinancialTechnology
FinTech
The buzzword
FinTechstarted to appear around 2015FinTech has its own specific connotation regarding:
Business model
Area of Finance
Technologies applied in Finance
FinTech by Business Model
FinTech companies expands the customer base by:
Democratizing technology
- through use of mobile apps (e.g. Robinhood, Chime)
Large cost-reduction with innovative/streamlined business model
- through automated models based on big data
- can have large customer base compared to size of the firm
B2B, B2C oriented -> P2P, Platform
FinTech by Financial Sector
Payment systems, Brokerage/Exchange services (Platform)
Paypal (Venmo), Zelle
Robinhood, Coinbase
Investments and Portfolio management
Robo-advising (Portfolio management)
High-Frequency, Algorithmic Trading (Mutual/Hedge Funds)
Credits and Loans (Banking)
- Crowdfunding, P2P lending (LendingClub)
FinTech by Technology
The financial companies that use innovative technologies
- Big data
- by volume & velocity: large, high frequency data
- by variety: image, sound, text data
- Machine Learning
- Blockchains/ Cryptocurrencies
- Internet of Things
- Virtual Reality / Metaverse
Peek at FinTech Business models
Sample start-up companies and their business models:
- Numerai
- Hedge fund leveraging crowdsourced models and big data
- Zest AI
- Credit risk analysis and automated underwriting with alternative data
- Niural
- global team hiring, tax compliance and payments